Forex Major Currencies Outlook (Mar 18 – Mar 22)

Encouraging numbers but reaction in USD was lackluster. USD debt soared to new record highs of over $22 trillion.

CPI for the month of February came in at 1.5% y/y vs 1.6% y/y as expected and 0.2% m/m as expected. Core CPI came in at 2.1% y/y vs 2.2% y/y as expected. Small misses on the numbers which weakened USD across the boards. Durable goods for the month of January came in at 0.4% m/m vs -0.4% m/m as expected. Capital goods orders nondefense ex air 0.8% m/m vs 0.2% m/m as expected. Better than expected reading especially considering weak numbers in previous months, but there is still a lot of ground to be covered for it to be characterized as healthy. Core durable goods came in at -0.1% m/m vs 0.1% m/m as expected.

This week FED will publish updated economic projections known as the "dot plot". Fed has pledged patience on interest rates since January so the focus is now on how it translates into the updated projections. Additionally, we will have housing and factory data as well as preliminary PMI numbers.

Important news for USD:

Tuesday:

• Factory Orders

Wednesday:

• FOMC Interest Rate Decision
• FOMC Statement
• FOMC Economic Projections
• FOMC Press Conference

Friday:

• Markit Manufacturing PMI
• Markit Services PMI
• Markit Composite PMI
• Existing Home Sales

EUR

Industrial production for the month of January came in at 1.4% m/m vs 1% m/m as expected. Decent and much needed beat for EU data. Ifo institute has slashed German GDP forecast from 1.1% to 0.6%. CPI data came in line with preliminary reading, headline CPI at 1.5% y/y and core CPI at 1% y/y.

This week we will have trade balance data, economic sentiment data from ZEW as well as preliminary PMI numbers. Additionally, EU Summit will be held on March 21-22.

Important news for EUR:

Monday:

• Trade Balance

Tuesday:

• ZEW Economic Sentiment Indicator (Germany and EU)
• Wage costs
• Thursday:
• EU Leaders Summit
• Consumer Confidence

Friday:

• EU Leaders Summit
• Markit Manufacturing PMI (Germany, France, EU)
• Markit Services PMI (Germany, France, EU)
• Markit Composite PMI (Germany, France, EU)

GBP

GDP for the month of January came in at 0.5% m/m vs 0.2% m/m as expected. Excellent start of the year for UK’s economy propped up by factory activity data. Manufacturing, industrial and construction have all beaten the expectations with construction output coming in at 2.8% m/m vs 0.8% m/m as expected. The economy is standing on the firm grounds, however Brexit is the main culprit influencing movements of GBP and for now pushes the data into the bacground.

Attorney General Cox has stated that legal risk remains unchanged and that UK will not have lawful means of exiting agreement. On March 12 PM’s Brexit deal was defeated in Parliament by whooping result of 391–242. On March 13 Parliament voted 312-308 in favour of never leaving the EU without a Brexit deal, this vote is non-binding, so there is a chance of UK could still face a no-deal Brexit. Parliament voted 321-278 in favour of not leaving the EU without a deal on 29 March. On March 14 Parliament voted 413-202 for extension on Article 50 effectively delaying the exit post March 29. Early indications show that EU may offer 1-2 year extension.

This week we will have data on employment, earnings and inflation. BOE is expected to keep interest rate unchanged so minutes will provide us with more insight on how BOE accesses Brexit uncertainties. Third meaningful vote will be held on March 20 and due to happenings surrounding the Brexit process higher than usual volatility can be expected on all GBP pairs. That volatility can be easily triggered by any Brexit related news so we would caution you to lower your lot sizes when trading GBP pairs.

Important news for GBP:

Tuesday:

• Average Hourly Earnings
• Unemployment Rate
• Claimant Count Change

Wednesday:

• CPI

Thursday:

• BOE Interest Rate Decision
• BOE MPC Meeting Minutes
• Third meaningful vote in the Parliament

AUD

China CPI came in at 1.5% y/y as expected although PPI came in slightly weaker than expected. Retail sales came in at 8.2% y/y vs 8.1% y/y as expected. Fixed asset investment came in at 6.1% y/y vs 6% y/y as expected and property investment rose 11.6% y/y vs 9.5% y/y the previous month while industrial production came in at 5.3% y/y vs 5.6% y/y as expected. Chinese economy was generally steady in period January-February, however downward pressures still exist. Industrial production has fallen to its lowest in 17 years.

Westpac consumer confidence for the month of March plunged to -4.8% m/m vs 4.3% m/m the previous month. A number of weak data coming from Australia lowered the confidence of consumers which in turn pressures the AUD down.

This week we will have minutes from the latest RBA meeting. Markets expect them to be dovish. Any excessive dovishness may push AUD downwards. We will also get employment data.

Important news for AUD:

Tuesday:

• RBA Meeting Minutes

Thursday:

• Employment Change
• Unemployment Rate

NZD

Food price index for the month of February came in at 0.4% m/m vs 1% m/m the previous month. This is a bit surprising reading considering the strong GDT auctions. Food price index comprises around 19% of the CPI. Manufacturing PMI for the month of February came in at 53.7 vs 53.1 the previous month. Production and new orders sub indexes contributed most to the number.

This week we will have regular bi-weekly GDT auction data on current account and Q4 GDP data which may influence RBNZ decision to cut interest rates later in the year.

Important news for NZD:

Tuesday:

• GDT Price Index
• Current Account

Wednesday:

• GDP

CAD

New housing price index for the month of January came in at -0.1% m/m vs 0% m/m as expected. Existing home sales for the month of February came in at -9.1% m/m vs -4% m/m as expected. Abysmal numbers showing price uncertainty present in Canadian housing market. Manufacturing sales in January have jumped to 1% m/m vs 0.4% m/m as expected with prior reading showing -1.3% m/m. Good number that will offset mainly poor data coming from Canada, apart from employment reports.

This week we will have data on wholesale trade, inflation and consumption.

Important news for CAD:

Thursday:

• Wholesale Trade

Friday:

• CPI
• Retail Sales

JPY

BOJ has left interest rate unchanged as expected. They concluded that Japan’s economy is expanding moderately but exports and output are affected by slowdown overseas. No changes in monetary policy and downgrades to the economic outlook were expected by the market and BOJ delivered. Governor Kuroda stated that momentum towards achieving 2% inflation target is maintained and emphasized that it is necessary to reach the target in order to achieve stable prices.

This week we will have trade balance data, minutes from the latest BOJ meeting, national inflation data and preliminary manufacturing PMI number for the month of March.

Important news for JPY:

Monday:

• Trade Balance
• Exports
• Imports
• Industrial Production

Wednesday:

• BOJ Monetary Policy Meeting Minutes

Friday:

• CPI
• Nikkei Manufacturing PMI

CHF

Important news for CHF:

Tuesday:

• Trade Balance
• Exports
• Imports

Thursday:

• SNB Interest Rate Decision

This week we will have trade balance data and interest rate decision. SNB will not make any changes as they patiently follow moves from ECB.

_{You can follow all economic events on the Economic Calendar page on our Website. MT4 server time is set to GMT + 2 and if you need assistance converting MT4 server time to your local time you can use some of the online time converters such as WorldTimeBuddy.}

_{Please note that this analysis should not be used as investing advice as it is only an overview of the economic events influencing the markets.
Please remember that MT4.VAR. and MT4.ECN. accounts have Market Execution. Please note how Execution works during high impact news and other times of low liquidity.}